UPDATE 1-Thai protest leader wants 12 months to push through reforms

* Protest leaders to meet military chiefs; to stay out ofPM's reform forum

* Graft body hears case against Yingluck party lawmakers

(Adds more from protest leader, case against Yingluck partylawmakers)

By Amy Sawitta Lefevre

BANGKOK, Dec 13 (Reuters) - The leader of a protest grouptrying to overthrow Thailand's government and scrap plannedelections said on Friday the prime minister should either stepdown or be forced out, and his movement would then need around ayear to push through reforms.

Prime Minister Yingluck Shinawatra has called an electionfor Feb. 2 in an effort to end the street protests but SuthepThaugsuban, a veteran lawmaker who resigned from parliament tolead them, has rejected the move.

Knowing that allies of Yingluck's brother, ousted formerpremier Thaksin Shinawatra, would probably win any election, hewants an unelected "people's council" to run the country.

On Friday, presenting his ideas to the media, Suthep said hewould meet military chiefs on Saturday to discuss his strategy,but he rejected any idea of cutting a deal with Yingluck, whoheads a caretaker government now that the king has endorsed theelection date.

She will hold a forum on Sunday to discuss reforms but saysthey can only be drawn up and implemented after the election.

"Yingluck's invitations for national reform forums arenothing new. We do not accept Yingluck's offer. We won'tnegotiate," Suthep told reporters.

Thailand's eight-year political conflict centres on Thaksin,a former telecommunications tycoon popular among the rural poorbecause of policies pursued when he was in power and carried onby governments allied to him when he was ousted.

Thaksin, who lives in self-imposed exile to escape a jailsentence for abuse of power, gained an unassailable mandate thathe used to advance the interests of big companies, including hisown. He has dismissed the graft charges as politicallymotivated.

Ranged against him is a royalist establishment that feelsthreatened by his rise and, in the past, the military. Someacademics see him as a corrupt rights abuser, while the urbanmiddle class resent what they see as their taxes being spent onwasteful populist policies that amount to vote-buying.

They see Yingluck as the puppet of Thaksin, who is thoughtto determine government policy and has been known to addresscabinet meetings by Skype.

"Instead of issuing laws that benefit the people ... theyhave used the parliamentary system in the wrong way to help justone group of people, ... to wash the guilt of ThaksinShinawatra," Suthep added, referring to a political amnesty billthat acted as a catalyst for the current crisis.

The "soft way out" of the impasse, he said, was for Yingluckto step down and let his council push through reforms. Failingthat, the people would simply seize power, he said.

"Once we complete this in 12 to 14 months' time ...everything will return to normal," Suthep said.

ARMY MEETING

The number of protesters on the street has dwindled to justa few thousand from 160,000 on Monday, when Yingluck announcedthe snap election, but Suthep shows no sign of giving up.

The focus is now on the meeting between the chiefs of thearmed forces, Suthep and other interested parties which, according to a statement issued by the military, aims "to find away out for Thailand".

The politically powerful army has staged or attempted 18coups in the past 80 years, including the ousting of Thaksin in2006, and its motives now are unclear. It has declined to getinvolved in the crisis so far but has offered to mediate.

On Thursday, Suthep sought to drum up support for his plansat a meeting with business leaders, talking of a "people'sassembly" of up to 400 members from a cross-section of society.His protest movement, he said, would get 100 of the seats.

He has offered little in the way of policy proposals beyondthose vague assembly plans.

Another front could open up against Yingluck on Friday, whenThailand's corruption watchdog starts a hearing into whether 312lawmakers from her Puea Thai Party acted illegally in trying topush through a change to the constitution, another spark for thestreet protests.

The lawmakers voted for a change that would have made theSenate a fully elected body, which was ruled illegal by theConstitutional Court. At present just under half of the membersof the upper house are appointed.

Any case would be pursued by a division of the Supreme Courtthat has previously delivered rulings that disbanded two partiesallied with Thaksin and banned executives from politics for fiveyears.

A ruling could take months, although judgments have beensped up in past crises.